Brussels to recommend curbing managers' super-bonuses
Brussels- The European Commission was Wednesday set to unveil guidelines on curbing excessive company bonuses, as well as new rules limiting high-risk investment hedge funds. Action on both issues has been prompted by the global financial crisis, which has in part been blamed on short-term profit-taking and lax legislation.
EU Internal Market Commissioner Charlie McCreevy was set to recommend that managers' bonuses should reflect the long-term performance of their companies, rather than short-term results. There should be limits on the variable component of their pay, and managers should repay their bonuses if they fail to deliver.
Data published by the commission in March showed that many of Europe's chief executive officers have enjoyed a surge in their salaries in recent years.
This was in large part due to an increase in their median annual bonuses, which used to account for 70 per cent of their base salaries in 2003 but 151 per cent in 2007.
So-called "golden parachutes" - generous benefits paid to executives when employment is terminated - should also be limited to no more than double the basic salary, McCreevy was set to say.
The bonuses guidelines being proposed on Wednesday are non-binding, and similar recommendations issued by Brussels in the past have been largely ignored by national governments.
By contrast, commission legislation designed to bring hedge funds under supervisory scrutiny will be binding, and will need to be approved by both the European Parliament and the finance ministers of the 27-member EU.(dpa)